External counsel can hone their skills as experts in an area of law, while in-house can hone these for an organization or industry, writes Mark Le Blanc
I am in the midst of hiring a junior lawyer and, not surprisingly, have been looking for a “T-shaped” lawyer.
In fact, this is stated in the opening sentence of the job description: “You are a T-shaped lawyer with 2-5 years of experience in general corporate commercial matters and some media experience who is looking for more complex challenges across many areas of practice.”
Aside from the fact that some applicants did not even research what this meant (really?), I have been generally impressed with the number of applicants that not only are aware of the concept, but that have articulated experience in using some of those skills.
In the middle of my search, I saw a Twitter post commenting on the fallacy of in-house counsel cost savings. The premise of the article was that their salary and benefits, etc. may outweigh the cost of retaining outside counsel.
This got me thinking. Let’s say I get the T-shaped lawyer of my dreams: is the hire good value for the organization? In short, why am I hiring versus using outside counsel?
In-house counsel are bringing to the table a breadth of skills, experience and organizational awareness that cannot be provided by outside counsel. They are deeply aware of the business of their organization and able to deliver timely legal and related business advice tailored to the goals and needs of the organization in order to help drive its goals and objectives. In short, they have a proximity advantage. Good in-house counsel leverage this significantly.
Outside counsel can hone their skills and experience as subject-matter experts (SMEs) for a particular area of law; in-house counsel can hone these for a particular organization and industry. Unless you are a large organization with a large legal department, you will not have the luxury of SME lawyers in-house.
You cannot simply weigh the value of in-house counsel by comparing their grossed-up salary cost to the cost of outside counsel (though, for most organizations, the grossed-up salary cost of in-house counsel is still a cost savings over outside counsel in general). For work requiring deep expertise, outside counsel makes sense, and it is much cheaper to buy that skill than have to staff it. But, for the core legal work for your organization, in-house is not just less expensive, it is, more importantly, more valuable.
Where is the real value?
Being closer to the business issues adds value on many levels that are not financial on their faces, but are ultimately very economical. First, there is the value of proactive advice; it is always better to prevent a problem from ever evolving. Second, quick pivots are possible by changing the business model to remove a critical risk at a time when pivoting is easy and low-cost. Third, legal advice and guidance can be woven into the evolution of a business model seamlessly to reduce time and cost. Fourth, the understanding of the Legal department in a particular line of business – especially if it is an evolving line of business – is deepened. Fifth, the communication and level of trust between the business unit and the Legal department is strengthened, which is critical when the inevitable unforeseen problems arise.
Overall, it reduces friction, increases speed to market, reduces risk, and increases the knowledge base of the organization. Ultimately, all of this saves money.
When to hire
Typically, GCs like to hire counsel with four to seven years of experience and from prestigious firms. The thinking is that at that stage, and coming from those firms, they will be well-trained. This is true. But, they are well-trained by the measure of success of a prestigious firm. This does not always mean they will be valuable in-house. In fact, some of those skills can create an outright hinderance to their success in-house.
For example, a very thorough and exhaustive memo on a certain issue leading to a carefully crafted opinion is a learned skill one hones in private practice. This is not a valuable skill in-house, where speed is critical. What is needed is the best advice possible given the limited time and information available. Often this is described as the “good enough” answer.
Most often, I would rather hire young, say one- to three-year calls or even at articles, and train them; and they can come from anywhere. This way you can grow the skills you need in a young lawyer without having to un-train them of any other skills before you begin your training. This is not to say that you will not want to hire a skilled senior lawyer at any time. You may, for example, be building out an entire new team to support a new line of business and need that senior skill set. But, for building your core team, train them.
Draft and groom
To use a sports analogy, I would argue that more GCs should draft and groom young talent for the core of their team, and only go to market to fill the odd hole in their line-up. For foreseeable holes that come up rarely, you can always rent.
If you want T-shaped lawyers to come into your organization and help drive value while managing risk, then you need to get them young and groom them. That is what firms are doing for their business: grooming young lawyers to be, ultimately, partners in the firm. They are not grooming young lawyers to be in-house counsel. That is your job.